Wal-Mart marked down toys, electronics, appliances and groceries while cutting prices on generic drugs in 38 U.S. states. Chief Executive Officer H. Lee Scott told analysts in October he expected sales to improve as holiday merchandise went on sale and gasoline prices fell. Wal-Mart had forecast unchanged same-store sales for November.
Wal-Mart's sales are slumping as retailers enter a quarter that accounts for almost one-third of annual profits. Sales on the day after Thanksgiving rose 6 percent from a year ago to $8.96 billion, ShopperTrak RCT said today. Bentonville, Arkansas-based Wal-Mart's attempt to spur holiday demand with lower prices may be risky, said money manager Walter Todd.
``That could really be disastrous for them, because if the sales don't come through, they're really going to get creamed,'' said Todd, who helps manage $850 million at Greenwood Capital in Greenwood, South Carolina. He sold his Wal-Mart holdings earlier this year on concern over slowing sales.
Wal-Mart said earlier this month that disappointing clothing sales and disarray from store renovations hurt results in October, when comparable sales rose 0.5 percent. The retailer began its holiday promotions Oct. 18 by cutting prices on 100 toys. The company will give final sales figures Nov. 30, when most U.S. retailers report November results.
`Taking the Lead'
Retailers kicked off the holiday shopping season yesterday with early openings and reduced prices. J.C. Penney Co., the third-biggest U.S. department store chain, said today it had ``brisk traffic'' at its stores, with home entertainment and sports apparel sales well.
Wal-Mart is ``definitely taking the lead'' with price cuts, said Patrick McKeever, an Atlanta-based retail analyst for Avondale Partners LLC. He estimated that the recent markdowns lowered Wal-Mart's ``already-low'' prices by 20 percent to 30 percent, with some items yesterday morning reduced by as much as half.
Last year's November sales rose 4.3 percent, buoyed by shoppers restocking after hurricanes.
U.S. retailers expect a same-store sales gain of 5 percent this holiday season, according to the National Retail Federation. Wal-Mart said comparable sales in the three months through January may rise 1 percent to 2 percent.
